Tuesday, 25 May 2010

SA accountants value everything they account

The general belief by some accountants that accounting is simply a matter of recording what happened in the past – as stated by some accounting professors – is completely untrue.

SA accountants value everything they account when they deal with the three basic economic items – monetary, variable and constant items - under low inflation in the SA economy.

The theory that 2% inflation is completely unharmful is also not true.

SA accountants would maintain existing constant item real values by not destroying them - as they are doing now to some portion of those constant items – with their very destructive stable measuring unit assumption as part of traditional Historical Cost Accounting.

On the other hand: they cannot create real value out of thin air by simply passing update entries when no real value exists. They do not do that.
Copyright © 2010 Nicolaas J Smith

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